Russian Skolkovo experts suggest stimuli for independent oil companies

February 12, 2014

The energy center of the Skolkovo business school has authored a study on the future of independent oil companies. The study looks at the role and potential of independent oil companies and offers amendments to rules and regulations in order to stimulate the sector development in Russia.

The study underscores the importance of small independent oil companies. First, they conduct exploration works. Second, they rationally use land resources because they develop the small deposits which are of no interest to large companies. Third, they stimulate competition.

In 2012, there were 250 independent companies working in the Russian oil sector. They produced 14.4mn tons of oil, accounting for 2.8% of national production. For comparison, there are 7,000 such firms in the US accounting for about 46% of national production.

The study said that the Russian government has paid little attention to the sector of independent oil companies so it could disappear.

The study suggested the following stimuli for the sector: the application of tax deferments or cuts to discoveries; royalty cuts; using the sector for pilot projects in taxation.

The study predicted that if the sector were stimulated, independent oil companies might triple production by 2030. 

Copyright: Oil and Gas Information Agency, 2014